Texas Property Insurance Bill Raises Concerns

A new bill that would bring sweeping changes to Texas property insurance law has raised the concerns of homeowners. House Bill 3646 seeks to revise the current Texas property insurance code and promises to protect policy holders from “unfair and deceptive practices.” However, some industry observers have noted that the changes would give some substantial advantages to insurance carriers, while limiting or eliminating provisions that help policy holders.

Texas Property Insurance Bill Promises Consumer Protection

HB 3646, as well as its companion Texas property insurance bill in the Texas Senate, seeks to protect the state’s consumers from “unfair and deceptive practices by insurers.” The bill also promises to establish a “competitive and stable” insurance marketplace, ensuring that customers can purchase policies from “multiple sources of insurance.” The Texas property insurance also seeks to remove “impediments to having affordable property insurance…for the benefit of Texas consumers.”

Texas Property Insurance Bill And “Excessive Litigation”

From the bill’s language, the Legislature proposes to protect Texas property insurance customers by limiting their ability to engage in “excessive litigation.” The bill describes the aftermaths of major storms across the state “have been followed by a marked increase in litigation.” The bill also mentions how Texas property insurance companies reported that “30 to 45 percent of their claims have resulted in litigation”, compared to single-digit percentages in previous years.

Does Texas Property Insurance Bill Blame Policy Holders?

The bill also states that the current Texas property insurance code “encourages claimants to over-value alleged property damage and make the litigation expensive.” The bill proposes that, unless changes are made to Texas property insurance laws, policy holders’ premiums will rise and insurance companies will leave the Texas market. The bill offers solutions for resolving disputes between insurers and policy holders “without excess expense or the imposition of unnecessary costs.”

Texas Property Insurance Bill Removes Insurer Penalties

A major issue with the Texas property insurance proposal lies in language that would effectively remove penalties for insurers missing critical deadlines. The bill states that a Texas property insurance company’s failure to meet deadlines in submitting its documentation for a claim “is not an unfair claim settlement practice” and “is not actionable” by policy holders. This language grants insurers the legal room to delay processing and paying off claims almost indefinitely, while facing neither criminal nor civil action for their delays.

Source: Insurance Busters

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